SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 1996
BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-12926 04-3224258
(Commission File Number) (IRS Employer Id. Number)
50 Rowes Wharf
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
Beacon Properties Corporation (the "Company") acquired a portfolio of two
office buildings in Rosslyn, Virginia (the "Rosslyn, Virginia Portfolio") on
October 18, 1996 for $99.1 million from LaSalle Fund II. This acquisition was
funded by the Company's $300 million Credit Facility led by BankBoston
Corporation. The Company and its affiliates are not related to any of the
other parties to this transaction.
The Rosslyn, Virginia Portfolio consists of (i) a 19-story office building
located at 1300 North 17th Street built in 1980 comprising approximately
373,000 square feet and (ii) a 19-story office building located at 1616 North
Ft. Myer Drive built in 1974 comprising approximately 293,000 square feet.
Major tenants in the Rosslyn, Virginia Portfolio include the American Red
Cross (approximately 75,000 square feet) and Price Waterhouse (approximately
74,000 square feet). The aggregate occupancy rate of the Rosslyn, Virginia
Portfolio as of September 30, 1996 was approximately 97%.
The Company based its determination of the price to be paid on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancy and opportunities to retain and attract additional tenants.
The Company did not obtain an independent appraisal on the Property.
Item 5. Other Events
The Company has entered into contracts to purchase eleven office
buildings.
New England Executive Park Portfolio:
In November 1996, the Company entered into a contract to acquire a portfolio
of office properties located in Burlington (suburban Boston), Massachusetts (the
"New England Executive Park Portfolio"). The New England Executive Park
Portfolio consists of nine of the thirteen buildings located in the New England
Executive Park; the remaining four are owner-occupied. The purchase price of the
New England Executive Park Portfolio is payable in two installments,
approximately $75 million will be paid at the closing of the acquisition with an
additional $17 million payable on November 30, 1998, contingent upon meeting
conditions regarding occupancy or rental income levels at the property in 1998.
The Company estimates that the aggregate purchase price for the New England
Executive Park Portfolio, including the $17 million contingent payment, is
approximately 60% of replacement cost. Following the consummation of the
acquisition, the Company intends to invest approximately $1.5 million in capital
improvements in the New England Executive Park Portfolio over the next three
years, including roofs and upgrades to mechanical systems.
The New England Executive Park Portfolio consists of nine office buildings
comprising an aggregate of approximately 817,000 square feet. The buildings
range in size from approximately 43,000 square feet to approximately 218,000
square feet and were developed between 1970 and 1985. Major tenants in the
New England Executive Park Portfolio include the Federal Aviation
Administration (approximately 114,000 square feet), Cayenne (approximately
63,000 square feet), Siemens Business Communications Systems, Inc.
(approximately 51,000 square feet) and Sun Microsystems, Inc. (approximately
44,000 square feet). The aggregate occupancy rate for the New England
Executive Park Portfolio as of September 30, 1996 was approximately 98%.
245 First Street:
In October 1996, the Company entered into a contract to acquire 245 First
Street located in Cambridge, Massachusetts for aggregate consideration of
approximately $45 million in cash, approximately 90% of replacement cost.
The 245 First Street property contains approximately 263,000 square feet
and consists of (i) Riverview I, a six- story office building renovated in
1986 and comprising approximately 109,000 square feet and (ii) Riverview II,
an 18-story structure built in 1985 comprising approximately 148,000 square
feet. Riverview I and Riverview II are connected by a four-story atrium
comprising approximately 6,000 square feet. Major tenants at 245 First Street
include Open Market, Inc. (approximately 81,000 square feet) and Softkey
International, Inc. (approximately 71,000 square feet). Softkey, and certain
other tenants, sublease their space from Mellon Bank who leases approximately
148,000 square feet of the property. As of September 30, 1996, the occupancy
rate for 245 First Street was 100%.
2
10960 Wilshire Boulevard:
In October 1996, the Company entered into a contract to acquire 10960
Wilshire Boulevard located in Westwood, California for aggregate consideration
of approximately $133 million in cash, approximately 80% of replacement cost.
Following the consummation of the acquisition, the Company intends to invest
approximately $1.8 million in capital improvements in the property.
The 10960 Wilshire Boulevard property was built in 1971 and has undergone
approximately $39 million of capital improvements since 1992. The property
consists of approximately 544,000 square feet in a 23-story office building.
Major tenants in 10960 Wilshire Boulevard include Saban Entertainment, Inc.
(approximately 111,000 square feet), Philips Interactive Media of America,
Inc. (approximately 95,000 square feet), BBDO Worldwide, Inc. (approximately
48,000 square feet) and Saltzburg, Ray & Bergman (approximately 31,000 square
feet). As of September 30, 1996, the occupancy rate for 10960 Wilshire
Boulevard was approximately 89%.
Additional Offering:
On November 1, 1996, the Company filed a prospectus supplement to its Form
S-3 Registration Statement (No. 333-02544) with the Securities and Exchange
Commission pursuant to which it proposes to offer 6,000,000 shares of common
stock (excluding the underwriters' over-allotment option).
Expansion of Board of Directors:
Effective January 1, 1997, the Board of Directors of the Company will be
expanded from seven to nine members when Dale F. Frey and Lionel P. Fortin
become Directors. Mr. Frey is President and Chairman of the Board of Directors
of General Electric Investment Corporation and Vice President of General
Electric Company. Mr. Fortin serves as Senior Vice President and Chief Operating
Officer of the Company.
Item 7. Financial Statements and Exhibits
(a) Financial Statements Under Rule 3-14 of Regulation S-X
Statement of Excess of Revenues over Specific Operating Expenses of
the Rosslyn Acquisition in Rosslyn, Virginia for the year ended
December 31, 1995 and (unaudited) for the nine months ended September
30, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
the New England Executive Park in Burlington, Massachusetts for the
year ended December 31, 1995 and (unaudited) for the nine months ended
September 30, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
10960 Wilshire Boulevard in Westwood, California for the year ended
December 31, 1995 and (unaudited) for the nine months ended September
30, 1996
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Nine
Months Ended September 30, 1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 1995 (Unaudited)
(c) Exhibits
2.1 Purchase and Sale Agreement between LaSalle Fund II and Beacon
Properties, L.P., dated as of September 20, 1996.
2.2 First Amendment to Purchase and Sale Agreement between LaSalle
Fund II and Beacon Properties, L.P., dated as of October 2, 1996.
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants.
3
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the Rosslyn Acquisitions in Rosslyn, Virginia
(the "Properties") for the year ended December 31, 1995. This financial
statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Properties after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of the
Rosslyn Acquisitions in Rosslyn, Virginia for the year ended December 31,
1995 in conformity with generally accepted accounting principles.
Boston, Massachusetts
September 27, 1996
F-2
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year For the Nine
Ended Months Ended
December 31, 1995 September 30, 1996
------------------ --------------------
(Unaudited)
--------------------
Revenues:
Base rent $12,602,024 $11,026,546
Recoveries from tenants 426,712 499,950
Other income 1,117,591 1,009,694
----------- -----------
14,146,327 12,536,190
----------- -----------
Specific operating expenses (Note 2):
Utilities 1,172,453 898,088
Janitorial and cleaning 500,759 426,513
Security 300,840 230,158
General and administrative 714,390 504,981
Repairs and maintenance 1,186,335 818,790
Insurance 143,743 108,327
Property taxes 911,665 707,796
Landscaping 26,707 32,665
----------- -----------
4,956,892 3,727,318
----------- -----------
Excess of revenues over specific operating expenses $ 9,189,435 $ 8,808,872
=========== ===========
The accompanying notes are an integral part of the financial statement.
F-3
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
The Rosslyn Acquisitions (the "Properties") are located in Rosslyn,
Virginia, consisting of two office buildings together encompassing
approximately 666,000 square feet. Beacon Properties Corporation intends to
acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment increased revenues by approximately $505,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the properties after acquisition, such as
management fees, depreciation, amortization, and interest expense.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
Year Ending December 31,
- --------------------------
1996 $15,485,000
1997 14,408,000
1998 13,952,000
1999 13,869,000
2000 12,714,000
Thereafter 26,860,000
As of December 31, 1995, two tenants occupied approximately 25% of
leasable square feet and represented approximately 24% of total 1995 revenue.
F-4
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the New England Executive Park in Burlington,
Massachusetts (the "Properties") for the year ended December 31, 1995. This
financial statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Properties after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of the New
England Executive Park in Burlington, Massachusetts, for the year ended
December 31, 1995 in conformity with generally accepted accounting
principles.
Boston, Massachusetts
March 15, 1996
F-6
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Nine
For the Year Months Ended
Ended September 30,
December 31, 1995 1996
------------------ ---------------
(Unaudited)
---------------
Revenues:
Base rent $11,990,549 $10,085,304
Recoveries from tenants 866,821 953,802
----------- -----------
12,857,370 11,039,106
----------- -----------
Specific operating expenses (Note 2):
Utilities 2,166,024 2,016,965
Janitorial and cleaning 682,271 570,074
Security 106,924 133,184
General and administrative 581,469 403,905
Repairs and maintenance 977,315 828,053
Insurance 103,854 71,578
Property taxes 1,623,541 1,218,045
Landscaping 181,496 177,812
Tenant services 528,211 452,264
----------- -----------
6,951,105 5,871,880
----------- -----------
Excess of revenues over specific operating expenses $ 5,906,265 $ 5,167,226
=========== ============
The accompanying notes are an integral part of the financial statement.
F-7
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
The New England Executive Park (the "Properties") is located in
Burlington, Massachusetts consisting of nine office buildings together
encompassing approximately 817,000 square feet. Beacon Properties Corporation
intends to acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment decreased revenues by approximately $59,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the Properties after acquisition, such as
interest income, management fees, depreciation, amortization, and interest
expense.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
Year Ending December 31,
- --------------------------
1996 $13,639,000
1997 12,611,000
1998 7,916,000
1999 5,894,000
2000 3,694,000
Thereafter 1,936,000
F-8
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the 10960 Wilshire Boulevard in Westwood,
California (the "Property") for the year ended December 31, 1995. This
financial statement is the responsibility of the Property's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Property after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of 10960
Wilshire Boulevard in Westwood, California, for the year ended December 31,
1995 in conformity with generally accepted accounting principles.
Boston, Massachusetts
October 29, 1996
F-10
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year For the Nine
Ended Months Ended
December 31, 1995 September 30, 1996
------------------ --------------------
(Unaudited)
--------------------
Revenues:
Base rent $7,235,712 $8,079,023
Recoveries from tenants 244,198 214,671
Other income 1,375,672 1,182,788
---------- ----------
8,855,582 9,476,482
---------- ----------
Specific operating expenses (Note 2):
Utilities 934,425 770,730
Janitorial and cleaning 493,250 438,757
Security 281,647 221,185
General and administrative 816,298 479,066
Management fee 320,040 385,563
Repairs and maintenance 1,168,367 804,389
Insurance 319,717 78,590
Property taxes 1,011,358 761,920
Landscaping 43,403 36,777
---------- ----------
5,388,505 3,976,977
---------- ----------
Excess of revenues over specific operating expenses $3,467,077 $5,499,505
========== ==========
The accompanying notes are an integral part of the financial statement.
F-11
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
10960 Wilshire Boulevard (the "Property") is located in Westwood,
California consisting of one office building encompassing approximately
544,000 square feet. Beacon Properties Corporation intends to acquire the
entire fee interest in the Property.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment increased revenues by approximately $894,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the Property after acquisition, such as
interest income and amortization.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
Year Ending December 31,
- --------------------------
1996 $ 6,682,000
1997 7,610,000
1998 7,528,000
1999 8,373,000
2000 5,498,000
Thereafter 12,662,000
As of December 31, 1995, one tenant occupied approximately 17% of leasable
square feet and represented 12% of total 1995 revenue.
F-12
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma Condensed Consolidated Balance Sheet of
Beacon Properties Corporation (the "Company") as of September 30, 1996, is
presented as if the acquisition of the Rosslyn, Virginia Portfolio and the
Pending Acquisitions had occurred on September 30, 1996. The pro forma Condensed
Consolidated Statements of Operations are presented as if the Offering, the
acquisition of the Properties acquired since January 1, 1995 (including
Perimeter Center, New York Life and the Fairfax Virginia Portfolios) and the
closing of the MetLife Mortgage loan, the acquisition of the Pending
Acquisitions and related assumption of debt had occurred as of January 1, 1995;
the Company qualified as a REIT, distributed all of its taxable income and,
therefore, incurred no income tax expense during the period.
In management's opinion, all adjustments necessary to reflect the above
discussed transactions have been made. The unaudited pro forma Condensed
Consolidated Balance Sheet and Statement of Operations are not necessarily
indicative of what actual results of operations of the Company would have
been for the period, nor does it purport to represent the Company's results
of operations for future periods.
F-13
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1996
(Unaudited)
Beacon
Properties
Corporation Pro Forma Pro Forma
(Historical) Adjustments Consolidated
------------- -------------- ---------------
(dollars in thousands)
Assets
Real estate, net $ 974,676 $352,050(A) $1,326,726
Deferred financing and leasing costs, net 15,908 15,908
Cash and cash equivalents 16,751 16,751
Mortgage notes receivable 51,490 51,490
Other assets 29,292 (9,000)(B) 20,292
Investments in and note receivable from joint ventures and
corporations 55,890 55,890
---------- -------- ----------
Total assets $1,144,007 $343,050 $1,487,057
========== ======== ==========
Liabilities and Stockholders' Equity
Mortgage notes payable $ 440,526 $ 440,526
Note payable, Credit Facility 18,000 176,670(C) 194,670
Other liabilities 27,293 27,293
Investment in joint ventures 24,467 24,467
---------- -------- ----------
Total liabilities 510,286 176,670 686,956
Minority interest in Operating Partnership 70,098 70,098
Stockholders' equity 563,623 166,380(D) 730,003
---------- -------- ----------
Total liabilities and stockholders' equity $1,144,007 $343,050 $1,487,057
========== ======== ==========
Notes:
(A) Acquisition of Rosslyn, Virginia Portfolio, New England Executive Park,
10960 Wilshire Boulevard and 245 First Street.
(B) Application of deposits.
(C) Net Credit Facility utilized.
(D) Net increase in stockholders' equity:
Proceeds of Offering $177,000
Expenses of Offering (10,620)
--------
$166,380
========
F-14
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(Unaudited)
Beacon Fourth Quarter
Properties New York Life 1996
Corporation Perimeter and Fairfax Va. Acquisitions Pro Forma Pro Forma
Historical Center (A) Portfolios (B) (G) Adjustments Consolidated
------------- ----------- --------------- --------------- -------------- ---------------
(dollars in thousands except per share amounts and shares outstanding
Revenue:
Rental income $ 97,308 $6,420 $19,098 $34,118 $156,944
Management fees 2,248 2,248
Recoveries from tenants 11,001 304 3,788 3,156 18,249
Mortgage interest income 3,567 $ 611(H) 4,178
Other income 7,585 208 845 2,639 11,277
-------- ------ ------- ------- ------- --------
Total revenue 121,709 6,932 23,731 39,913 611 192,897
-------- ------ ------- ------- ------- --------
Expenses:
Property expenses 24,607 1,562 4,875 10,195 41,239
Real estate taxes 12,491 591 1,708 3,452 18,242
General and administrative 11,963 378 812 1,496 250(I) 14,899
Mortgage interest expense 20,739 1,461(C) 2,912(F) 9,391(J) 34,503
Interest--amortization of
financing costs 1,618 15(D) 1,633
Depreciation and
amortization 21,737 1,196(E) 4,374(E) 7,921(E) 35,228
-------- ------ ------- ------- ------- --------
Total expenses 93,155 5,203 14,681 23,064 9,641 145,745
-------- ------ ------- ------- ------- --------
Income from operations 28,554 1,729 9,050 16,849 (9,030) 47,152
Equity in net income of joint
ventures and corporations 2,053 2,053(1)
-------- ------ ------- ------- ------- --------
Income before minority interest 30,607 1,729 9,050 16,849 (9,030) 49,205
Minority interest in Operating
Partnership (4,231) (1,432)(K) (5,663)
-------- ------ ------- ------- ------- --------
Net income before extraordinary
items $ 26,376 $1,729 $ 9,050 $16,849 ($10,462) $ 43,542(2)
======== ====== ======= ======= ======= ========
Common shares outstanding 39,233,255
Net income per common share $1.11
(1) Includes:
Depreciation and amortization $2,998
Amortization of financing costs $673
(2) Company share of Operating Partnership is 88.49%
See accompanying notes to pro forma condensed consolidated
statement of operations.
F-15
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(Unaudited)
(A) Results of operations of Perimeter Center for the period ended February
14, 1996.
(B) Results of operations of the Fairfax County Portfolio and the New York
Life Portfolio for the periods ended September 4, 1996 and August 15,
1996, respectively.
(C) Net interest expense associated with the MetLife Mortgage Loan in the
amount of $218 million based on a 7.08% interest rate for the period
ended prior to March 15, 1996.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
(E) Detail of depreciation expense by property is presented as follows:
Basis Life Depreciation
----------- -------- ---------------
Perimeter Center $287,130 30 yrs $1,196
======
Fairfax County Portfolio $ 69,300 30 yrs $1,568
New York Life Portfolio 135,000 30 yrs 2,806
------
$4,374
======
Rosslyn, Virginia Portfolio 89,145 30 yrs 2,229
New England Executive Park Portfolio 67,500 30 yrs 1,688
245 First Street 40,500 30 yrs 1,013
10960 Wilshire Boulevard 119,700 30 yrs 2,992
------
7,921
======
(F) Fairfax County Portfolio interest expense on debt assumed for period
prior to acquisition:
Principal Rate Expense
------------ -----------------
JOHN MARSHAL 21,068 8.38% 1,197
E.J. RANDOLPH (1) 18,016 7.44% 909
NORTHRIDGE 16,306 7.28% 806
------ -----
55,390 2,912
====== =====
(1) Paid off by Credit Facility proceeds at closing.
(G) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard
for the nine months ended September 30, 1996.
(H) Interest income related to the acquisition of the Rowes Wharf mortgage.
(I) Additional general and administrative expense attributable to
acquisitions.
(J) Credit facility activity:
Draw Expense
Source/Use Date (Repayment) (Savings)
- ------------------------------------ --------- ------------ ----------
March 1996 offering proceeds 3/4/96 $(21,300) $ (462)
Fourth Quarter 1996 Acquisitions 4th QTR $176,670 9,853
------
$9,391
======
(K) Reflects decrease for minority interest (11.51%) in Operating
Partnership.
F-16
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
New York
Beacon Life
Properties Properties and
Corporation Acquired Perimeter Fairfax Va.
Historical In 1995 (A) Center (B) Portfolios (F)
------------- ------------ ------------ ---------------
(dollars in thousands except per share amounts and
shares outstanding)
Revenue:
Rental income $71,050 $5,339 $52,117 $30,623
Management fees 2,203
Recoveries from tenants 9,742 1,193 2,244 6,308
Mortgage interest income 2,546
Other income 5,502 26 862 1,111
------- ------ ------- -------
Total revenue 91,043 6,558 55,223 38,042
------- ------ ------- -------
Expenses:
Property expenses 18,090 1,560 12,376 7,485
Real estate taxes 10,217 949 4,107 2,680
General and administrative 9,755 111 2,116 1,254
Mortgage interest expense 15,226 15,434(C) 4,438(G)
Interest--amortization of
financing costs 1,370 120(D)
Depreciation and amortization 17,428 1,047(E) 9,571(E) 6,810(E)
------- ------ ------- -------
Total expenses 72,086 3,666 43,724 22,667
------- ------ ------- -------
Income from operations 18,957 2,892 11,499 15,375
Equity in net income of joint
ventures and corporations 3,222 1,338
------- ------ ------- -------
Income before minority interest 22,179 4,230 11,499 15,375
Minority interest in Operating
Partnership (4,119)
------- ------ ------- -------
Net income before extraordinary
items $18,060 $4,230 $11,499 $15,375
======= ====== ======= =======
Common shares outstanding
Net income per common share
(1) Includes:
Depreciation and amortization
Amortization of financing costs
(2) Company share of Operating Partnership is 88.49%
Fourth
Quarter
1996
Acquisitions Pro Forma Pro Forma
(H) Adjustments Consolidated
--------------- -------------- ---------------
Revenue:
Rental income $36,894 $196,023
Management fees $ 723(I) 2,926
Recoveries from tenants 3,409 22,896
Mortgage interest income 3,027(J) 5,573
Other income 2,758 10,259
------- ------- -----------
Total revenue 43,061 3,750 237,677
------- ------- -----------
Expenses:
Property expenses 12,594 52,105
Real estate taxes 4,540 22,493
General and administrative 2,198 750(K) 16,184
Mortgage interest expense 12,790(L) 47,888
Interest--amortization of
financing costs 1,490
Depreciation and amortization 10,562(E) 45,418
------- ------- -----------
Total expenses 29,894 13,540 185,577
------- ------- -----------
Income from operations 13,168 (9,790) 52,100
Equity in net income of joint
ventures and corporations 4,560(1)
------- ------- -----------
Income before minority interest 13,168 (9,790) 56,660
Minority interest in Operating
Partnership (2,403)(M) (6,522)
------- ------- -----------
Net income before extraordinary
items $13,168 ($12,193) $ 50,138(2)
======= ======== ===========
39,233,255
Net income per common share $1.28
(1) Includes:
Depreciation and amortization $3,895
Amortization of financing costs $896
(2) Company share of Operating Partnership is 88.49%
See accompanying notes to pro forma condensed consolidated
statement of operations.
F-17
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
(A) Results of operations of properties acquired during 1995 for the period
prior to their acquisition:
Wellesley Westlakes 75-101 2 Oliver Ten Canal
Building 8 Building 2 Federal St. Street Park Total
------------- ------------- -------------- -------------------- ---------
Revenue:
Rental income $308 $1,010 $2,474 $1,547 $5,339
Management fees
Recoveries from tenants 425 112 656 1,193
Mortgage interest income
Other income 7 15 4 26
---- ------ ------ ------ ----- ------
Total revenue 308 1,442 0 2,601 2,207 6,558
---- ------ ------ ------ ----- ------
Expenses:
Property expenses 61 413 573 513 1,560
Real estate taxes 20 89 505 335 949
General and administrative 8 27 18 58 111
Mortgage interest expense
Interest--amortization of financing costs
Depreciation and amortization 50 239 404 354 1,047
---- ------ ------ ------ ----- ------
Total expenses 138 768 0 1,500 1,260 3,666
---- ------ ------ ------ ----- ------
Income from operations 170 674 0 1,101 947 2,892
Equity in net income of joint ventures and
corporations $1,338 1,338
---- ------ ------ ------ ----- ------
Income before minority interest 170 674 1,338 1,101 947 4,230
Minority interest in Operating Partnership
---- ------ ------ ------ ----- ------
Net income before extraordinary item $170 $ 674 $1,338 $1,101 $ 947 $4,230
==== ====== ====== ====== ====== ======
(B) Results of operations of Perimeter Center for 1995.
(C) Interest expense associated with the MetLife Mortgage Loan in the amount
of $218 million based on a 7.08% interest rate.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
F-18
BEACON PROPERTIES CO RPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
(E) Detail of depreciation expense by property is presented as follows:
Basis Life Depreciation
----------- -------- ---------------
Previously Acquired Properties:
Wellesley Building 8 $ 4,500 30 yrs $ 50
Westlakes Building 2 12,306 30 yrs 239
2 Oliver Street 16,174 30 yrs 404
Ten Canal Park 10,609 30 yrs 354
-------
$ 1,047
=======
Perimeter Center $287,130 30 yrs $ 9,571
=======
Fairfax County Portfolio $ 69,300 30 yrs $ 2,310
New York Life Portfolio 135,000 30 yrs 4,500
-------
$ 6,810
=======
Rosslyn, Virginia Portfolio 89,145 30 yrs 2,972
New England Executive Park Portfolio 67,500 30 yrs 2,250
245 First Street 40,500 30 yrs 1,350
10960 Wilshire Boulevard 119,700 30 yrs 3,990
-------
10,562
=======
(F) Results of operations of the New York Life Portfolio and the Fairfax
County Portfolio for 1995.
(G) Fairfax County Portfolio interest expense on debt assumed:
Principal Rate Expense
------------ -----------------
JOHN MARSHAL 21,068 8.38% 1,764
E.J. RANDOLPH (1) 18,016 8.25% 1,486
NORTHRIDGE 16,306 7.28% 1,187
------ -----
55,390 4,438
====== =====
(1) Paid off by Credit Facility proceeds at closing.
(H) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard
for 1995.
(I) Management fee from 75-101 Federal Street.
(J) Interest income related to the acquisition of the Rowes Wharf mortgage.
(K) Additional general and administrative expense attributable to
acquisitions.
(L) Credit facility activity:
Draw Expenses
Source/Use Date (Repayment) (Savings)
- ---------- ---- ----------- ---------
Offering proceeds March 20 ($ 58,000) ($ 1,065)
Rowes Wharf mortgage Various 23,700 780
Westlakes Building 2 July 26 13,500 632
Offering proceeds August 31 (66,500) (3,652)
75-101 Federal Street and 2 Oliver Street September 29 39,000 2,397
Ten Canal Park December 21 11,000 882
March 1996 offering proceeds Full year ($ 21,300) (1,757)
Fourth Quarter 1996 Acquisitions Full year $176,670 14,573
-------
$12,790
=======
(M) Reflects decrease for minority interest (11.51%) in Operating
Partnership.
F-19